LaRouche's Jan. 22 Webcast:
`The Issue Is Bankruptcy'

Lyndon LaRouche gave a webcast address to an audience in Washington, D.C., and internationally, over the Internet, on Jan. 22, just two days after the inauguration of President Barack Obama. Here is an edited transcript of his opening remarks. A two-hour discussion followed his presentation. The event was sponsored by the Lyndon LaRouche Political Action Committee (LPAC), and was simultaneously carried on the Internet at the LPAC website, where the webcast and discussion are on file. The event and the discussion which followed were moderated by LaRouche's spokeswoman, Debra Freeman. To see a PDF version of the address, plus the dialogue, use this link. The Dialogue with LaRouche (HTML) is available at this link.

Debra Freeman: Good afternoon, ladies and gentlemen. On behalf of LaRouche PAC, I'd like to welcome all of you on this bright, sunny day in Washington, to today's seminar and webcast.

As you know, this webcast is being broadcast internationally, in capitals around the world, as citizens everywhere, both inside and outside the United States, share in the sentiment that, in the words of one very wise man: "We might be out of the Bushes, but we are very far from being out of the woods."

There are many things that we will address in the course of today's proceedings, and much discussion that we can have. But given the urgency of the international crisis, given the urgency of the domestic crisis, what I would like to do, really without any further discussion or introduction, is to present to you, Mr. Lyndon LaRouche.

Lyndon LaRouche: Thank you. I shall devote the presentation preceding the question-and-answer discussion period, to the most crucial issue facing the United States government now, and the world as a whole. And the issue is: bankruptcy. The fact of the matter is, that the United States is bankrupt. The U.S. system is bankrupt. The U.S. government is bankrupt. And every part of the world is also bankrupt.

Not only does this state of bankruptcy exist, but the moment at which the decisions have to be made to bring this problem under control is now. That's why the priority.

The other aspect of this thing, is that very few people, including the present administration of the United States, the current President's administration, know how to deal with this problem. And therefore, that's the hole that has to be filled, immediately. And therefore, I shall indicate some of the essential ground rules under which the emergency policy of the United States must be crafted to assure the success of the Obama Administration, and in the process, to ensure, that nations such as China, Russia, and others around the world, do not tumble into a collapse in the meantime.

Before a Dark Age Closes In...

We are on the verge, not of a simple bankruptcy, but of a general chain-reaction collapse, globally, comparable in form to the breakdown crisis in the middle of the 14th Century, the so-called New Dark Age. Only this time, the threatened dark age, while immediate, is not merely in Europe: It is worldwide. There is no part of the world which could escape a dark age, unless, the United States itself, the United States government, takes the actions now, under the leadership of its President, which put the world through bankruptcy organization before a dark age closes in.

China is ready for chaos. India is somewhat behind that, in time schedule. But a general collapse of the planet will hit India, too. Russia is on the verge of general bankruptcy. Every part of Europe, including the British Empirethank Godis on the verge of bankruptcy. And the time has come, therefore, to understand what to do.

Most of the proposals which I hear from around the U.S. government itself, that is, from influential circles around government, as well as those who are coming into government, is that they really don't understand the problem. They understand many aspects of the problem, but they don't understand the problem, and therefore, their tendency would be to make a mistake.

Now one of the big mistakes is this: We have a President, who's just been elected and installed, inaugurated. He must act, now, because he's at the high point of his ability to act. If he postpones these questions, or tries to approach them gradually, certain evil things can take over, and remove from his hands the ability to take the kind of action which he might be able to pull off now. If he's not able to pull it off, if he doesn't get the support to pull it off, then we're all in trouble, and the world as a whole is in trouble. But if he takes the right action, takes it promptly, and proceeds with resolution, as I think he would, then we can make it, as a planet. And what the United States does in that direction, is crucial and will be decisive.

First of all, the policy has to be, to put the United States system into bankruptcy reorganization. Don't fool around with this reform, that reform, this adjustment, that adjustmentforget it! Put it through bankruptcy reorganization now! That means, put the Federal Reserve System into bankruptcy reorganization: That's one of the first necessary steps. Put the Federal Reserve System into bankruptcy reorganization. And it deserves that, after what it did under Alan Greenspan, and what this poor schnook, who now is in his place, is doing or not doing. The system is bankrupt.

What has happened recently, under the Bush Administrationand under the Congress! Remember, the leadership of the Congress is the place that made this a real chaos: Back on July 25th of 2007, when I forecast a general collapse of the system, as coming on immediately, we still had room to get out of this mess, without too much drastic action. That is now no longer possible. Due to what happened in the Congress, including when poor Barney Frank, who is the scapegoat of the centuryI think he wanted some success, and he's made it, as "Scapegoat of the Century." Everything that was done in terms of dealing with this crisis, was wrong. What was bad was made worse. We bankrupted ourselves with this bailout policy. The bailout policy was, in my view, unconstitutional and illegal, and warrants impeachment actions against those who are responsible for initiating it, and misleading and panicking the population into getting their representatives to vote for it. This was a crime against humanity. There should have been no bailout.

What's the alternative? The banks are bankrupt! Financial houses are bankruptso what? If you engage in gambling and you incur a gambling loss, you're supposed to eat it! You don't get to go to the government to get a bailout. You don't get a second life. Where else? I mean, a guy says, "I got good news for you, MotherI'm bankrupt." "Why's that good news?" she says. "Because the government's going to bail me out." What kind of law is that? It's going to take away the pensions of our widows and orphans and so forth, and that's going to bail us out. No!

That's immoral, it's unconstitutional, it's insane.

No Bailout!

So therefore, what we have to do, is immediately, put the entire system through bankruptcy reorganization. The best way to do it, is to act on the Federal Reserve System, because we created the Federal Reserve System, and we want to keep a separation, as Hamilton laid it out, between the functions of the Treasury Department and those of banking. Our affection is devoted to state and local chartered banks, under bank rules which we had with Glass-Steagall. That's the way it should be.

Now, what's happened is, in this corrupt mess, which the Congress has createdremember, the majority of the Congress is responsible for this! They did it! So don't say, the Congress says, "Mr. President, you trust us"! The President can not trust the Congress, after what they did. They voted for this swindle! You're going to trust them? It's immoral! They voted for it!

No, the President has to take the leadership, as the Chief Executive and leader of the nation, in the action, from the Presidency, which must demand support from the Congress, with the support of the people, and ram through an immediate reform: a reform of the U.S. Federal Reserve System, among other things.

What we have to do, is, we have to protect legitimate claims in the banking system, the legitimate functions of the banking system, and forget the illegitimate functions. Cast them aside: Cancel all bailouts! Cancel! No bailout! The only thing you do, is you put the Federal Reserve System through bankruptcy, and by putting it through bankruptcy, you put it under bankruptcy protectionnot bailout, bankruptcy protection.

Then: You conduct an assessment of the situation of the bank, like a bank holiday procedure. Those elements which correspond to legitimate functions of chartered banking, will be protected. Those functions which are, because of the repeal of Glass-Steagall, included in this, will be cancelled. They will be simply put into a freeze, through assessment. Because we must save the chartered banking system, which is, in a sense, with its history, a constitutional feature of our system. National chartered banks and state chartered banks of the type which take deposits, and make reasonable, secure investments on behalf of those deposits, which are entrusted with money passed through the Federal government, through the creation of a currency, under the authorization of Congress, will go through that.

We have to, then, rebuild the U.S. economy.

A Hamiltonian National Bank

Now, for example, take a point: We have a fraudulent measure, now in force, in what is, and what is not valuable. The economy is not productive, now. We're in a collapsing economy, in general; it's true also in Europe; it's in the world at large. We have to force investment into areas which are productive.

Now, Greenspan's standards of productivity are fraudulent. Forget Greenspan's standards. We're talking about physical standards. We're talking about standards of performance in production, in productive values, per capita per square kilometer. We're talking about health care, we're talking pensions, we're talking about production as such, physical production; essential services, health-care services, this kind of thing. And those things have to be protected and promoted. We are now operating, in point of fact, as a nation, we're operating below breakeven. in physical terms.

We're a bankrupt nation: We need bankruptcy protection. We go to our Federal government for bankruptcy protection. We put the banking system under protection in bankruptcy; we put the Federal Reserve system into bankruptcy. We take, and proceed to enact, a national banking act where we put all the essential functions of banking under protection of a national banking act system: a Hamiltonian National Bank. We use the National Bank as an instrument of credit, which absorbs the Federal Reserve System. Because the Federal Reserve System is bankrupt! And it needs bankruptcy protection. We put it in bankruptcy protection under the creation of a national banking act, a Hamiltonian National Bank.

Then we take national credit. We take what is worthless, and we call it worthless; we classify it as worthless, as in bankruptcy. We put it out of its misery. And banks which are bankrupt, but which are useful in their function as chartered banks, we'll keep their doors open, we'll maintain their functions, and we will generate Federal credit, as a source of lending power, to get the economy moving again. We will build agriculture, we will build infrastructureespecially infrastructure.

Now, the other problem we have here, in trying to solve this problem, is the fact that over the past period, especially since 1968; since 1968, the United States has been functioning at a loss in terms of basic economic infrastructure. That was the year wherewell, let me explain this: Because, again, you're dealing with an area of economics, which most economists know nothing about. That's why they call them economists, I guess.

The modern economy is based in its progress on two things: It's based on technological progress, scientific and technological progress, number one. Because, if you don't increase the productivity of a population, per capita and per square kilometer, the human population uses up some of its resources and becomes poorer and poorer and poorer! And therefore, you have to compensate for this, with large-scale investments in scientific and technological discoveries and progress, in order to increase the productive powers of labor, per capita and per square kilometer, in the total territory.

This requires scientific progress. As you go to scientific progress, you're going to capital intensity: that is, you make investments in machine tools, and scientific technologies, in agricultural improvements, and so forththat sort of thingwhich have a life, a useful life where you use these investments up by wear and tear. And these periods range from a period of a few years, in terms of relatively short-term investment, to up to, in industry, about a quarter-century; in terms of basic economic infrastructure, you're going up to a half-century; when you go to some major things, like total national water systems, water-management systems, you're talking about a century investment.

We Have Become Poorer

So therefore, you have to look at an economy, in terms of the rate of growth of its unused-up part of investment in this sort, capital investment. And you have to promote more of that, but you have to also take account of the fact that you're wearing out some of your investment, as in mass transit systems, as in power systems, as in water management systems.

For example: Where could you, if you were alive then, and could get a drink of water, from a faucet, safely, in where you livedsay, back 40 years ago; in how many of locations would you dare drink water from a faucet, today? And similar facilities?

What happened to your health care? What happened to your ability to get health care before, and now? We have used up our investment in infrastructure. We used up our capital investment in these kinds of improvements. And since 1967-68, fiscal year '67-'68, the United States has been operating on a negative rate of growth of investment and useful basic economic infrastructure. We have become poorer, and poorer, and poorer. Our productivity has collapsed! Because we counted relatively useless services, which were largely make-work, to give people some kind of fake employment to keep them busy, instead of giving them productive employment, where they're producing something of physical value, or some service, which is of especially human value.

So what we have, is, since '67-'68, the date of the arrival of the Baby-Boomers, when the Baby-Boomers were rioting, and becoming disgusting, hmm?from that period on, the United States' economy, per capita and per square kilometer, has been degenerating! Now, what we've done, is we've made up a lot of so-called services and other forms of employment, alternative employment, and ways of keeping people alive, which are not productive! They do not contribute to the increase of the production of physical wealth, per capita and per square kilometer! So we've been investing in things we should not have invested in, and we have been failing to maintain the level of productivity in things that we do need.

Therefore, look at prices: Go back and take the cost of a typical wage, the weekly wage of a typical person, not some guy who flew out with a golden parachute, but a typical working person, in society. Look at the purchasing power, as measured in dollars, and measured in physical equivalents, before and now. We have been going through a long range of inflation, in this period. Why? Because we've been robbed. We've been robbed, because other means, other forms of employment, other forms of activity, such as Wall Street gambling, have been used in place of investment in production!

Why Save the Auto Industry?

For example: the auto industry. People say, "We must save the auto industry." Why do you want to save the auto industry? Where are you going? Where's anybody going these days? They're not going to work! We overbuilt the auto industry anyway. It was a fake! We shouldn't have! We should have relied more on mass transportation.

For example: Go back to my young years, even in the post-war period. How many hours did it take you to commute to work in a typical area in the United States? In many communities, it was 15 minutes. In other communities, a half an hour. What are people doing now? In the area of Washington, D.C., you can commute two and half to three hours from parts of this region into work within the region, each way. How much of family life does that involve? That's what we're being put through, through this kind of process.

So, we have lowered the productivity, the actual, physical productivity, per capita and per square kilometer, of the United States. And we've done similar things in Europe. We have exported our highly productive capabilities in the United States, as outsourcing, to other parts of the world.

We have now created a really interesting problem for China: The Chinese economy is now in a phase of collapse. We ripped up our industries, from the United States and from Europewe ripped up those industries, and we shipped the production to China, for us. We then go bankrupt, and China, which now depends upon these industries and this production assignment we deployed to them over the past nearly 40 yearssuddenly that market collapses! And China's going through a grave crisis, as a result of our exporting our industries, for production, to China as cheap-labor sources. And paying the Chinese prices which are not adequate for them to maintain the development of their economy as a whole, when it would have been more rational, to give China the opportunity to develop its infrastructure, and to develop its industries on the basis of infrastructural development, and thus have a stable situation.

Compare, for example, the case of India. Both countries are countries with a lot of poor people, say 63% of the people in India. But India does not have the crisis that China has, because India is not as dependent upon foreign exports as China is. China's highly dependent upon foreign exports. And the collapse of China's export market, which is part of a collapse of the export market of everybody, these days, is now a social crisis and political crisis for China.

Russia is in the process now of collapse, as a result of similar kinds of bad thinking. Europe as a whole, is bankrupt, and in a state of collapse. And what's the reason for it? It's largely greengreen thinking. We have stopped producing physical values; we have stopped capital-intensive investment; we have dropped nuclear power. And nuclear power is the essential remedy for much of the economic problems we have today.

If you try to go with a green policy, and anti-[nuclear] policy, you go with this crazy, lunatic, "free energy" policywhich is the idea of a complete, unscientific, anti-scientific lunaticthe planet's not going to make it! We have to go, heavily, to nuclear power. We need to charge up more thorium reaction plants, and more uranium plants, in order to meet the basic power requirements of this planet, and many of the productive requirements as well.

We Did It to Ourselves

So therefore, what we have to do, is we have to recognize that this crisis is not some kind of "spontaneous" market phenomenon, or this and so forth, or what most people have said. We decided to do the wrong thing, especially from 1967-68 on: We decided to shift away, to a green perspective, away from a high-technology, productive perspective and agricultural perspective. As a result of that, we lowered the productivity per capita and per square kilometer of the United States, in physical terms, in terms of physical needs. We did similarly in Europe. We relied on exporting our production at cheap wages to other parts of the world.

So we created the cycle! We created the collapse. This was not a "market" phenomenon. The market reflected the insanity of the government and many other institutions, in changing the policy away from the policy we associated with Franklin Roosevelt's Presidency, in mobilizing for World War II, into this kind of policythe "green" policy, the post-industrial society policy, the globalization policy which we have today. And therefore, we, in the process of allowing ourselves to use up the capital investment, to use up the resources for scientific and technological progress in productivity. We created the cycle. We created the pattern of using up the means we had to become as wealthy and powerful as we had been as a nation earlier.

And this cycle of decayit already began under Truman. Truman was no asset to the United States. Truman ruined the United States. But we didn't notice it as much. It was after '67-'68, in that fiscal year, where the net infrastructural investment, physical investment in the United States went onto the negative side. And similar things happened in Europe. And then, after '89, worse happened worldwide.

There was no "business cycle"; there was an insanity cycle, an insanity in terms of policies, in the post-war period, where we should have learned something from the experience of rebuilding under Roosevelt. We turned it in the other direction, and we decided "there's another way to run an economy! People would like it better this way! Or, they would like it this way, better: We didn't like to get our hands dirty, any more. And so, we adopted policy, where we dropped our productivity, we dropped our productive potential. And we've found, we've reached the point where it has run out, and the system is collapsing.

Now, what we have to do, is invest in ourselves. Invest in our commitment to a future. Our commitment to change from a counterproductive mode of society, to a productive mode: And that means, government must intervene, and freeze these things, and force investments which will, in the long term, over 25 years or so forth, rebuild this economy to the kind of relative standard it represented a long time ago.

So we are going to have to create credit, a lot of credit, and the credit's going to be partly in the form of the U.S. dollar.

An Anti-British Empire Coalition

At the same time, we have to do something else: We have an international problem on our hands: In taking steps to prompt the recovery of our system, we have to take a look at the rest of the world. We have to take a lead in doing that.

Now, most of our problem, that we have, comes from the British Empire. The British Empire has been the big influence, the British influence in leading us down the pathway toward this destruction. What we have to do, is we have to look now, having decided that we're going to solve our own system, reorganize our own system, at the same time, at a partnership with other nations in rebuilding the world system on a cooperative basis. This means we have to go to, say, the big nations, big nations such as China, Russia, and India. These are our natural partners. They're not the only onesyou have Korea, South Korea in particular, you have Japan; you have other countries of Asia, other countries of Europe.

Europe doesn't function right now, because Europe has been destroyed by this European system now operating. And Europe will have to free itself, and get back to a nation-state system, away from this present European common market system, the way it's developed under the British influence.

The main problem we have is the British, and in anything we do, generally, you have to disregard the British in making policy. Let them sit off by themselves, the British Empire, and let it do what it wants to. And treat them as a nation-state, but don't take them into your counsels in making international policy. They've already done too much of thatthey made a wreck of us.

So you have to unite the United States, with an anti-British coalition, in a sense, an anti-British Empire coalition. And the anti-British Empire coalition, since Europe is not ready to do thatthat is Western and Central Europe. You go to Russia, you go to India, you go to China. And you then organize a world system of cooperation, to bring the other nations in and to long-term investment in building up the world economy.

And that's the way we have to go. This kind of decision.

A Credit System, Not a Monetary System

Now, one of the real problems, here, is the idea of a monetary system. No sane person should want a monetary system, but Europe has one, and we're a victim of one. What we need to do, is return to a credit system. Now, remember what a credit system is in the United States: Under our policy, money can not be uttered in the United States, without the initiative of the President, and without the consent of the Congress. Similarly, no international treaty can be reached, except with the initiative of the President and the consent of the Congress. Therefore, our creation of what we called a "credit system," is based on that consideration.

So what we have to do now, is put the whole system into bankruptcy reorganization, defend the dollar, and create an agreement with Russia, China, India, and other countries participating, for a fixed-exchange-rate system of the type which Roosevelt specified in connection with his Bretton Woods conference in 1944. Not the 1945 procedure, which was a change from Roosevelt's, under Truman.

Because, remember what President Roosevelt's intention was, at the end of the war: Roosevelt's intention waswe had a broken world, a war-torn world. Russia was in a mess; Europe was ruined; England, too, was ruined. Other parts of the world were ruined. Roosevelt's intention was to eliminate the British Empire, to create a system of cooperation under a fixed-exchange-rate system, under which the United States would take the vast productive potential which we had mobilized in the form of a military, wartime capability, and take that vast potential, and utilize that to assist two things: One, in eliminating empire, eliminating colonialism; freeing Africa, in particular, freeing China; freeing India; rebuilding Russia, rebuilding Europe; and to use the vast machine-tool and related capability we had directed for winning the warand we did win the war. We didn't win the war because our troops were better trained than the Germans. We won the war because we had the logistics to do so, where they did not. And it was American logistics, American mass production of airplanes and everything else: where we had materiel with us when we were serving overseas, we had it in tons, where they had it in pounds. And we had that superiority in productive power, to win the war. Without that American productive power, we would have lost the war!

Roosevelt's intention, in the post-war period, was to take this productive power, and the policy of developing it, which he had utilized under his leadership, under wartime conditions, and say, "We're now going to use that same power, to rebuild the world; to provide the machine-tool capital goods and things of that sort, which will feed the world. We're going to break up the British Empire! We're going to eliminate all empires on this planet!"

But under Truman, we reversed that process. Truman went with Churchill! The United States tolerated it. The British restored a colony in Indo-China, where wethe OSS includedhad freed Indo-China from colonialism. We backed the Dutch, in conducting a war, to reconquer Indonesia! We assisted the British in controlling India, assisted the process of splitting India between Pakistan and India, which has turned out to be quite a mess these days. And similar kinds of things.

So, we allowed the British to continue crimes against humanity in Africa! We, in the 1970s, with Henry Kissinger and others, made it U.S. policy as well as British policy, that the Africans would not increase their population, would not invest, would not have access to use of their own raw materials: Because the Britishand the United States, of the 1970sagreed that the natural resources of Africa "should be preserved for the benefit of future generations, of the English-speaking people"! And that goes on today; what do you think goes on today? If you want to talk about humanity, and you're not going to kick the British out of Africa, you're not serious about humanity.

Then we have the drug problem. The British have been operating on the basis of the international drug traffic since the 1790s. In the 1790s, the British, including some of our Wall Street types, were running the African slave trade into the United States. And then they discovered, in the 1790s, that this was not profitable for their ships. So what did the British do? The British went into the opium trade: And they went to India, and to Turkey, for supplies of opium and other drugs, and they opened up the market in China, for opium and opium products.

And guess what? It's still running today. The Queen of Englandnot herself, but the institutionsruns the international drug traffic: Take the case of George Soros. George Soros is a British agent. He controls the drug trafficking, much of it, the principal part, from Asia into Europe; he controls the drug trafficking in South America; he controls it through the Caribbean; he's behind it coming across the border into the United States from Mexico; and he's a leading political influence inside the United States. But he's a British asset.

So, Roosevelt understood this. And understood that in order to have a safe world for humanity, which is not going into things like the two world wars that we'd just gone through, both of which were organized by the Britishin order to avoid that, we had to kick the British out of that business. We had to eliminate all traces of imperialism and colonialism. We had to help build up these economies, with our American methods of concentration of machine-tool and related power, to create industries, to increase the productive powers of labor on this planet. And that was our policy.

Truman went the other way.

So, we went into a great recession in the late 1940s, because the Truman Administration, in alliance with the British, went back to a pre-Roosevelt policy, and in the process shut down a vast amount of the potential for production which we had built up as war materiel potential during World War II. That's how we went into that trouble.

The Only Successful Economic Forecaster

Then you look at the 1950s, where I began doing some consulting work then, and had a chance to come up with a forecast about a 1957 recession. Well, how did I do that? Because I knew what was going on. And I looked at the way that the industries were behaving, and that Arthur Burns' influence was working inside the administration of Eisenhower. And what was happening, is, I was able to forecast; I said, inevitably, this thing is coming down. I knew it from consulting.

Take the auto industry, which was one of the industries which I forecast was going to collapseand it did, in 1957, along with others. How did it collapse?

Well: They were trying to build up an expansion of automobile sales and production. So what they did, is they increased the life-span of automobiles being sold, and this went from 12 months to 24 months to 36 months, and 36 months with a balloon note at the enda big note at the end, the last payment. And this happened, not only in the automobile industry, it happened in virtually every other aspect of that kind of industry. And so, I simply knew the calculations. I knew that physically, the physical values for which credit was outstanding, and paper credit, had nothing to back them up. So, I said, "Well, we're going to have a recession by February of 1957." We had a recession by 1957.

So that there was never a case in this period, where some kind of statistical forecasting, or market forecasting, explains why these things occurredrecessions and depression occurred, as now. It occurred precisely because we, with our system, accepted policiesfirst of all, we accepted the shutdown of our productive potential, which was bequeathed to us as the product of the war production, during the war. We shut that down to a large degreehad a serious recession in '47-'48 as a result.

We came back under Eisenhower, and we went through another credit expansion, this time under Arthur Burns' advice, which resulted in the deepest recession in the post-war period, 1957-58. On the basis of looking at the policies, then, I said, "Well, this system is going to collapse, some time during the second half of the 1960s, if it continues this way." And it did! In 1967-68. And then the whole thing collapsed in 1971-73.

So, I've been in the business of forecasting, and the only successful forecaster, of this kind of forecasting, in the entire post-war period, in Europe or the United States. Why? Because I understood these problems. And I understood that the monetarist policy is the one that leads to the kind of disaster which has hit us, right now.

As a result of these policies, beginning with the shift from Roosevelt's policy in 1945-46, the split from there; the switch again, after 1957; the switch again! The killing of Kennedy, which cleared the way for the Indo-China war, which was also used as another way of ruining the U.S. economy! In '67-'68 we had passed the zero point, where the amount of infrastructure we were losing from wear-and-tear and other causes, was greater than the amount we were gaining. So we were heading on a long-range road.

Then we went to a green policy. A so-called solar policy, of shutting down nuclear power, which was the one chance we had, to rebuild our industries, and rebuild our technology. And we were getting worse and worse. And under Carter, with the Trilateral Commission, we destroyed the U.S. economy! We limped along with the remains of that during the 1970s, and we went into the recession under George Bush I, or the Emperor George Bush I, and developments in Europe.

We destroyed the productive power of the world in the way we dealt with the Soviet collapse. If we had dealt rationally with the Soviet system's collapse, as I had proposed, having warned of this thing: I warned of the Soviet collapse in 1983; warned of it publicly later. The Soviet system collapsed exactly as I forecast it would collapse, and at approximately the same time I said it would collapse! We still didn't change! I forecast the '87 recession: They still didn't learn their lesson! I forecast what would happen under George Bush I, the Emperor, and they still didn't pay attention. And so it went, on and on and on.

So there has been no mystery to this process. Nothing has descended from the sky upon us, unless it's from God Himself. And that, as punishment for what we've done in our policymaking!

So what we have to do, is recognize that we have made the mistakes, by allowing our governments to be so stupid, or so corrupt as they've been. And we're not the only stupid jerks on this planet, thank God. Or whatever, the other way around. The Europeans are stupid. And what they did to the Russians, was criminal. The Soviet Union represented a great productive potential. Instead of cooperating with what remained of the Soviet Union after the collapse of Gorbachov and company, we should have entered into cooperative agreements with them immediately, because we needed that productive power! We turned them into a basket case.

Here, the Soviet Union had access to the greatest infrastructural potential, in terms of raw materials, in all Asia! And only in the Soviet institutions, did the scientific institutions exist which were capable of developing the tundra areas and similar areas of high raw materials potential. The Soviet Union's potential, properly used, was essential for our policy for Asia: We didn't have to kill anybody! All we had to do, was enter intowith the aid of Germanyenter into cooperation with the new government in Russia, and enter into these kinds of long-term projects and we could have recovered nicely, as a planet.

We didn't. We went the opposite way.

So when you're talking about the crisis today, the economic policies, and the monetary policies, and the built-in policies of our government, in this way, over these years, have been the source of our self-destruction. And the time has come for us to recognize that. So therefore, we have to go back to the kind of thinking, which we had, under the leadership of Franklin Roosevelt.

The British Were Out To Start a War

Now let me just explain one other big problem, here. Some people have said, that Roosevelt wasn't such great shucks, during the 1930s. Well, they're wrong.

The problem has been, that the British wanted to start World War I, as a sort of a Seven Years War repeat. The intention was, to eliminate the American economic factor in Eurasia, particularly in Russia and in Germany, Bismarck's Germany. Therefore, the British aim was to destroy the economic development, physical economic development of Eurasia, and the two powers most relevant to that, which were tied to the U.S. policy, were Germany, under Bismarck, and Bismarck's policy for Germany was an American policy. That doesn't mean it was American, in the sense that it was an American colony, but it meant that the model of the American economy under Franklin Roosevelt and beyond, was the policy of Bismarck, especially from about 1877 on. Right? So, under Bismarck, Germany, from about 1877-1878 on, became a great, driving industrial power, with a great reform, in terms of labor reform. And great railway systems were being developed.

Similarly, in the same period, 1877-78, Russia moved in the same direction. They begin working on developing railway systems to unite Eurasia for development.

The British said, "No! We won't tolerate that!" So the British were out to start a war. And their intention was to get a war going between Russia and Germany, over the Balkans, started by Austria. Bismarck blocked that. So what the British did, is they got rid of Bismarck, through the British influence on the royal family of Germany, the Hohenzollerns. As a result of that, immediately, you had the assassination of the President of France, within a year or two later: Sadi Carnot. You had the British, the Prince of Wales, in 1894, organized the Mikado of Japan to launch a war against China, which continued until 1945.

As a result of doing these things, and the assassination of a President of the United States, McKinley, and bringing in a virtual traitor, Teddy Roosevelt, and a Ku Klux Klan fanatic, Woodrow Wilson, we joined the British side in World War I.

Now, from that point on, until the election of Franklin Roosevelt, the Presidency of the United States was largely controlled, the Presidency and Congress both, were largely controlled by an element which we would call, later, in the 1920s and 1930s, "fascist." The Presidency of Teddy Roosevelt, the Presidency of that Ku Klux Klan fanatic Woodrow Wilsonthe man who gave rebirth to the Ku Klux Klan while he was President of the United States; and similar people from Wall Streetcontrolled the U.S. economy and politics, from 1901, until Roosevelt was elected and installed as President.

Now, when Franklin Roosevelt became President under conditions of Depression, he was able to direct the policies of the United States in an improved direction. But! Wall Street and the Supreme Court were still controlled by the fascists! When I say "fascists," I mean, Wall Street bankers and other people who were actually part of this operation, and who had supported Mussolini, enthusiastically; who had supported Hitler, enthusiastically, as Prescott Bush, the grandfather of George, the recent exit here, had supported Adolf Hitler personally; as a matter of fact, he hadPrescott Bushhad written the letter, the equivalent of a check, to a German bank, which bailed Hitler out in time to become Chancellor of Germany. And the Bush family are a bunch of fascists, from that time on.

The Pearl Harbor Attack

Now, what happened is, the day Pearl Harbor happenedI happened to be in New York on that Sundayon the day that happened, these guys began to get a little bit scared, particularly because of Pearl Harbor. Because some people knew that the attack on Pearl Harbor had been organized by the British in the 1920s, when the British had an alliance with Japan against the United States, on U.S. naval power. The British and Japanese, and others, were determined to cut down the U.S. naval power. And they were planning to go to the point of warfare or a limited war, with the United States, in order to bring down U.S. naval power. For this purpose, Japan agreed, on its part, to be the agent of Britain in an attack on Pearl Harbor.

So when the Pearl Harbor attack actually occurred, it had a funny effect. Because what it did, it meant that the Wall Street crowd, the entire anti-Roosevelt Wall Street crowd, were entirely Hitler backers. And Prescott Bush, the grandfather of the recently exited President, who had put Hitler into power, in effect, on behalf of the British Bank of England, was among the malingerers who wasn't willing to give up his connections to the Nazis that quick.

The problem has been, these guys, these institutions, organizations, think tanks, so forth, which were behind this process, from Teddy Roosevelt's inauguration, until Pearl Harbor: These people are the right-wing organizations of great influence in Wall Street and in United States' politics and finance today!

And that's what the problem was in the post-war period. When Truman came inand Truman had been a patsy of these guysTruman changed the policies away from Roosevelt's policies, back to the policies of the pre-Roosevelt period, with the backing of those New York and London bankers who had been the backers of Adolf Hitler. And what we're suffering today, and have been suffering, especially since the Kennedy assassinationwe have been suffering the effects of that same bunch of political influences up to the present time.

Therefore, how are you going to deal with this? That means, that in looking at the present crisis, the London-allied crowdthe Anglo-Dutch Liberal crowdfrom London, and their New York banker Wall Street friends and cronies, who are still the same alliance, which corrupted U.S. Presidential politics from the assassination of McKinley until Roosevelt's 1941 changethat crowd is still in there.

Get the President To ActNow!

Now, how do you deal with that? When you're looking at the members of the Congress, some of them are powerful people, relatively speaking, but they're not Presidents. And most of the ordinary representatives in our political system, are weaklings. Not necessarily because they're weak morally, but because they're weak in influence and weak in power. Don't expect them, like a bunch of parliamentarians, to bail this nation out from its great troubles now. This can only come by a mobilization, a surge of mobilization of the American people, the majority behind an incumbent new President! As it happened with Roosevelt.

Now, the conditions, of course, with Roosevelt inauguration and Obama's are different. But! This principle applies: You have to take the occasion of a popular, newly elected President, who comes in with sudden authority to make changes, to make a number of very big changes, a limited number of very big changesbecause all the other changes are easier to do: It's the big, crucial changes, you've got to make! Don't try to sneak up on it. You're out to kill a man who's out to kill youyou got to get him first.

That means, where do you go? You go to the center of power. And the center of power, here, is the issue of economy. It's control over finance, it's control over the U.S. dollar, over the U.S. credit and banking system. The President of the United States, with support of the great majority of the American people, who wish to be freed now, from the afflictions they're suffering, which are worsening; a President who is in a position where the world is looking at him, as a center of traditional power in the world: What is he going to do, that's going to better the conditions of life of endangered people of China? Of an endangered Russia? Of many endangered nations of Asia? Of the endangered people of Africa, and of Central and South America? What's he going to do for us, this great President?

He has one, limited time to act! And he's got to act on the most crucial decision. And the most crucial decision, is the financial-banking system. He must take charge of the financial-banking system, not by nice little measuresbut, by the rough-tough measure of bankruptcy reorganization of the U.S. financial-monetary system. Reestablishing the kind of credit system which Franklin Roosevelt intended, and with due reference, which Alexander Hamilton had intended, in founding the Department of Treasury himself.

So therefore, what you have to do: The system has been wrecked, it's been poisoned, it's been polluted, and so forth. The President of the United States must move, and must terrify, essentially, everybody into saying, "We're going to put this financial-banking system into receivership." And the best way to do it, is take the Federal Reserve system, specificallyit is bankrupt!put it into receivership!

What We Need To Rebuild

Now, what're you going to do with it? Well, you're going to do two things with it. You're going to take the whole banking system, you're going to take those parts of the banking system whose functions correspond to traditional chartered banking practices. You're going to restore Glass-Steagall, immediately, with an amplified form. Don't take any argument on ityou're going to restore it, period! Cut it out! It was a great mistakecut it out.

And then you're going to create a mass of credit to start some things going.

Now, we don't have many industries to start going. You're not going to build the auto industry again, because we do have an auto industry: It's called "Japanese." And it was a cheap-labor industry, wasn't it? The old GM/Chrysler/Ford industry, that's gone! That was destroyed, with the help of the leadership of the Congress in the beginning of 2006. The Congress destroyed it! They could have saved it then; they destroyed it. Well, what're we going to do?

Well, we don't need a lot of this automobile industry production; it's not going to work. It's hopelessit's a hopeless case to start that. What you do, is you take the auto industry area, and you look at two things, or three things: Look at the floor space which was associated with production for the automobile industry before. That's still there. The floor space is there. Then you take the total population associated with the auto industry, of all types, ordinary people, in the auto industry; then you take, third, the machine-tool sector of the auto industry.

Now the machine-tool sector of the auto industry is the driver. The way the thing works, is, science and engineering and so forth are done in the machine-tool sector. The work that's done by the scientific and related work in the machine-tool sector, now creates the designs of the products which are manufactured as automobiles or something else. This machine-tool sector, is a sector which produced airplanes, locomotives, and many other things in former times. It can still do that!

So what we need is, as you see in the case of Katrina, you need to rebuild the water systems of the Mississippi River. We have the entire area, on both sides of the Mississippi, between the two mountain ranges on the East and the West, which are, in a sense, in a desperate condition. The Mississippi system is collapsing, as the case of Katrina demonstrates. The Ohio River system, which was somewhat developed, is also wrecked through old age; it needs repair, major repairs. The upper part of the Mississippi was never properly developed. The Missouri side was never properly developed. We also have a vast water problem, water crisis, in the Western part of the United States, water-management crisis.

So therefore, one of the things which is required, is the large-scale instruments, required for rebuilding the water-management system of the Central States of the United States, between the Alleghenies and the Rocky Mountains. We also need to do this, as part of developing a water system which will affect both the United States and Mexico, and also benefit Canada, but we build a water-management system, of the type we know can be done, to deal with that problem, to increase the food production, to increase the food development production, and also to create new cities, new industries and so forth, in parts of the country that are now destitute.

We need to go to large-scale nuclear power. Nuclear power is the only really safe and effective power, needed to meet the requirements of people today. Because, with nuclear power, you can do a lot of things, including make things clean, and you can't do it otherwise. So with the fourth-generation type of uranium plantand with the thorium-cycle plant which is largely now proposed for India, for smaller applications in the border areawith this sort of thing, we can solve many problems, including problems of pollution. And these are, contrary to rumor, perfectly safe: There is no accumulation of nuclear waste; that's a complete fraud. The story is out there, but there's no truth to it; it's a fraud. And it's a fraud of a certain faction that wanted to go in that direction. That's another subject I won't go into.

But therefore, we need to build a mass transportation system. We can transport people by rail, today, at speeds of 300 miles an hour. So why do you need to sit on a highway? We can build all kinds of mass transit systems of that characteristic.

We also need to decentralize a lot of our production. Instead of having very large industries controlled by certain financial centers, we need to decentralize some of the U.S. production. We need to build up centers of employment and production, in various parts of the country: Go back to building the territory of the nation as a whole.

So this power business, mass transit, water management, these are the tools which lead to developing the new technologies, which enable us to create new industries. And that's what you need to do!

We Can Assist the World To Develop

So therefore, since we don't have a very skilled populationthere's another aspect to this, which is international as well. You're not going to take a population of the farmers of India, who are poor, or similar parts of the world, who are poor, or the poor of Africa, you're not suddenly going to make them productive geniuses. They have a certain productive skill, but what they need is something which enhances their productivity without demanding that they suddenly make a leap in capability of production.

In Africa, for example: Africa's a big food-growing area of the world. Unfortunately, diseases and other problems interfere with the net production of food, even though Africa has a large food-growing area, agricultural area, and a population which is largely oriented to agriculture. The problem is, diseases and other things destroy the food supply, and prevent them from being productive. And they don't have sanitation and many other things that are necessary for this process.

If you supply Africa with assistance in capital investments, with help of foreign countries, in developing transportation systems, power systems, and so forth, then, suddenly, an Africa which seems very destitute, becomes rather productivenot because the people have suddenly mastered great skills, but simply with the skills they have, and with some assistance, they're able to greatly increase their net production, which includes their general welfare.

They also have natural resources there, which are useful in other ways. These natural resources represent a potential source of international income for African nations. If they had access to the means of developing these resources. So we can help them with that, and it's part of our job.

We can do similar things in India: India has a water crisis. The water crisis is acute. Because many parts of the world have been depending upon what's called fossil water. We have been running down fossil water supplies, exhausting them, by not replenishing them. Fossil water resources are being drawn down. For example, there's a threat to India, from using up and drawing down fossil water resources. They got a big one in Indiadown deep under the Deccan! But it's 2 million-year-old fossil water, deep down! And they're being driven in that kind of direction.

So, that's the point. So we can, in various parts of the world, assist the world, with our participation, with our policies, in moving in these kinds of directions.

Recognize, as I said before, the problem here is, not because of "this" financial investment or "that" financial investment, or this monetary thing. It's because we have adopted policies of practice, in succession, especially over the post-war period, since the time that Roosevelt died, we have adopted policies, which in each caseas my own experience proveshave led, predictably to a collapse of the system as it was operating then! And we have reactedagain, predictably!through policies which ledpredictably!to another collapse of the U.S. economy!

It's not a monetary statistical thing. If you're not increasing your productivity, then attrition is taking over; if you're overestimating your income and drawing it down, you are going to have a collapse. And I can say, my authority is, I have predicted these things a number of times, forecast them, and they've always happened exactly as I have said, where everybody who uses different methods, has been wrong! No one matched me on '57it's precise. No one matched me on these other crisesthey were all predictable, they were all foreseeable! Not by statistics, but by understanding the physical principles of economy.

Not a Penny for Garbage!

And so, we've come to the point now, that the President of the United States must be supported in acting to put the present system, economic system of the United States, in particular, into a general reform, general reorganization, reorganization in bankruptcy. This means putting the Federal Reserve system into bankruptcy, under bankruptcy protection; taking the assets, or claimed assets, of the banking system and sorting them into two piles. One pile fits the chartered bank standard, conventional ordinary banks, as under Glass-Steagall, that kind of contingent. Those banks must be restored to full functioning now, and they must be used as receptacles of Federal credit to get some things moving that have to be gotten moving.

On the other side, the garbage side, the bailout side: Not a penny! You put them into bankruptcy receivership, freeze them. That's the garbage department: You freeze the garbage so it doesn't stink too much. Don't put more garbage in there, don't generate more garbage.

And on that basis, now we can then use Federal credit, generated under our system, our constitutional system: With the consent of Congress, we can channel credit as needed to start some growth programs, largely in basic economic infrastructure.

For example, take the auto industry sector; take that strip which is called the auto industry in the North; take that area, recognize, identify, earmark these areas, which are areas of machine-tool capability and have labor forces and floor space available to build things we need, such as a new national rail system; such as systems to rebuild our river systems, aircraft systems, nuclear power plants, other things that are needed, mostly in the area of basic economic infrastructure. Get the people who are working in the auto plants back to work, in new kinds of work, suited to their traditions and skills, and suited to their associations and lines of communication that they used formerly, for their operations. That will change things.

Then, at the same time, we have to do the same thing with Europe. We have to act with Europe and with Asia, to help them, go through a general bankruptcy reorganization of their international monetary-financial systems. The first thing I would dowe're going to deal with Europe, of course. We won't have much of a problem with France; we won't have much of a problem with some people in Italy. We will start there if that's where we can start. China is waiting for us to come up with something to help them: They're desperate now. We have to respond! India is going to be at the point, it's going to demand the same thing. Russia is in a crisis, now! We have to bring in these nations: Russia, China, and India, with other nations. We have to engage Japan's cooperation, which will be no trouble under these circumstances; we have to engage Korea, which will be no trouble under these circumstances. We have to engage other nations in Asiano trouble. But we have to proceed, immediately, to start to turn the world in a new direction: Up. Up.

And that way, we can make it.

So: Take the Federal Reserve System. Declare, from the Presidency, a general bankruptcy reorganization of a bankrupt system. The President actsemergency. Under national emergency, to save the United States, and to save the peace of the world. Put the Federal Reserve system into receivership. Move to create a National Bank of the United States in the Hamiltonian tradition. Use the National Bank as a way of cleaning up the Federal Reserve system, and use it for the kinds of things that Roosevelt would have done, were he alive today, to do it.

And under those conditions, we can begin to do just fine. But: No more bailout. No more bailout.